1. No category

NO. 14-751
In the
Supreme Court of the United States
PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF
AMERICA; GENERIC PHARMACEUTICAL ASSOCIATION;
BIOTECHNOLOGY INDUSTRY ORGANIZATION,
Petitioners,
V.
COUNTY OF ALAMEDA, CALIFORNIA; ALAMEDA COUNTY
DEPARTMENT OF ENVIRONMENTAL HEALTH,
Respondents.
On Petition For Writ of Certiorari
to the United States Court of Appeals
for the Ninth Circuit
MOTION FOR LEAVE TO FILE BRIEF AS
AMICUS CURIAE AND BRIEF OF THE
CHAMBER OF COMMERCE OF THE UNITED
STATES OF AMERICA AS AMICUS CURIAE IN
SUPPORT OF PETITIONERS
U.S. CHAMBER LITIGATION
CENTER, INC.
KATE COMERFORD TODD
TYLER R. GREEN
1615 H Street, N.W.
Washington, DC 20062
(202) 463-5337
MUNGER, TOLLES & OLSON LLP
FRED A. ROWLEY, JR.
Counsel of Record
ELLEN MEDLIN RICHMOND
355 South Grand Avenue
Thirty-Fifth Floor
Los Angeles, CA 90071-1560
(213) 683-9100
[email protected]
Counsel for Amicus Curiae
January 28, 2015
MOTION OF AMICUS CURIAE FOR LEAVE TO
FILE BRIEF IN SUPPORT OF PETITIONER
The Chamber of Commerce of the United States of
America (the “Chamber”) respectfully moves for leave
to file the accompanying brief as amicus curiae under
Supreme Court Rule 37.2(b).
Petitioners have
consented to the filing of this brief. Respondents
have withheld consent. The Chamber has a strong
interest in the granting of the petition for certiorari
and has a perspective on the legal and policy matters
it raises that will aid the Court, and therefore
requests that its brief be accepted.
The Chamber is the world’s largest business
federation, directly representing 300,000 members
and indirectly representing the interests of more than
three
million
companies
and
professional
organizations of every size, in every industry sector,
and from every region of the country. Because the
Chamber’s members are frequent participants in
interstate commerce, they have an acute interest in
the proper application of constitutional principles
that prevent local governments from hindering the
flow of commerce among the states and in preventing
the proliferation of inconsistent regulations across
states and municipalities. The Chamber regularly
files amicus briefs in important cases implicating
these interests.
The Chamber offers a perspective that differs from
those of the parties and illuminates the issues before
the Court, and would welcome the opportunity to
present its views.
The petition for certiorari
challenges the constitutionality of an Alameda
County ordinance that requires pharmaceutical
companies whose products are sold within the County
to establish and operate programs for disposing of
unused drug products. The concurrently submitted
amicus brief addresses the extraterritoriality and
federalism concerns raised by laws like Alameda
County’s, and the potential implications of both the
Ordinance and the decision below for businesses
nationwide. These issues have not been addressed in
depth in the petition, and the Chamber believes that
these arguments will aid the Court in its
consideration of the serious constitutional issues the
petition raises.
For the foregoing reasons, this Motion for Leave to
File should be granted, and the attached proposed
Brief of Amicus Curiae in support of Petitioners
should be accepted.
Respectfully submitted,
U.S. CHAMBER LITIGATION
CENTER, INC.
KATE COMERFORD TODD
TYLER R. GREEN
1615 H Street, N.W.
Washington, DC 20062
(202) 463-5337
FRED A. ROWLEY, JR.
Counsel of Record
ELLEN MEDLIN RICHMOND
MUNGER, TOLLES & OLSON LLP
355 South Grand Avenue
Thirty-Fifth Floor
Los Angeles, CA 90071-1560
(213) 683-9100
[email protected]
Counsel for Chamber of
Commerce of the United States
of America
i
TABLE OF CONTENTS
Page
INTEREST OF AMICUS CURIAE ............................ 1
SUMMARY OF ARGUMENT .................................... 2
ARGUMENT ............................................................... 6
I.
BY UPHOLDING A LOCAL LAW THAT
OPERATES ACROSS STATE LINES, THE
OPINION BELOW CONTRAVENES THIS
COURT’S DORMANT COMMERCE
CLAUSE PRECEDENTS, FLOUTS CORE
FEDERALISM PRINCIPLES, AND
DISRUPTS INTERSTATE COMMERCE ....... 6
a.
The Ordinance Imposes
Conditions on Out-of-County
Commercial Transactions for
Purely Local Ends ..................................6
b.
The Ninth Circuit’s Endorsement
of Extraterritorial Municipal
Regulation Contravenes this
Court’s Dormant Commerce
Clause Precedents ..................................9
c.
The Opinion Below Ignores Core
Federalism Principles ..........................13
d.
By Allowing Municipalities to
Impose Regulatory Obligations
Outside Their Borders, the Ninth
Circuit’s Ruling Threatens
Significant Disruption to
Interstate Commerce............................16
ii
TABLE OF CONTENTS—Continued
Page
II.
THE TIME FOR REVIEW IS NOW .............. 20
CONCLUSION ......................................................... 21
iii
TABLE OF AUTHORITIES
Page(s)
FEDERAL CASES
Association des Éleveurs de Canards et d’Oies
du Québec v. Harris,
729 F.3d 937 (9th Cir. 2013), cert. denied,
135 S. Ct. 398 (2014) ......................................11, 20
Baldwin v. G.A.F. Seelig, Inc.,
294 U.S. 521 (1935) ............................................4, 9
BMW of N. Am., Inc. v. Gore,
517 U.S. 559 (1996) ........................................10, 13
Bonaparte v. Tax Court,
104 U.S. 592 (1881) ..........................................9, 14
Brown-Forman Distillers Corp. v. N.Y. State
Liquor Auth.,
476 U.S. 578 (1986) ..............................................10
Edgar v. MITE Corp.,
457 U.S. 624 (1982) ......................................4, 9, 10
Fulton Corp. v. Faulkner,
516 U.S. 325 (1996) ..............................................17
Gibbons v. Ogden,
22 U.S. 1 (1824) ....................................................14
Healy v. Beer Inst.,
491 U.S. 324 (1989) ...................................... passim
Huntington v. Attrill,
146 U.S. 657 (1892) ..............................................14
iv
TABLE OF AUTHORITIES
Page(s)
Okla. Tax Comm’n v. Jefferson Lines,
514 U.S. 175 (1995) ........................................15, 17
Pharmaceutical Research and Manufacturers
of America v. Walsh,
538 U.S. 644 (2003) .................................... 4, 11, 12
Printz v. United States,
521 U.S. 898 (1997) ..............................................14
Wardair Canada, Inc. v. Fla. Dep’t of Rev.,
477 U.S. 1 (1986) ..................................................15
Wyoming v. Oklahoma,
502 U.S. 437 (1992) ................................................9
STATE & LOCAL STATUTES
Alameda County, Cal. Health & Safety Code §
6.53.030(14)(ii) ....................................................7, 8
Alameda County, Cal. Health & Safety Code §
6.53.030(15) ............................................................7
Alameda County, Cal. Health & Safety Code §
6.53.040(A) ..............................................................7
Alameda County, Cal. Health & Safety Code §
6.53.040(B) ..............................................................8
Alameda County, Cal. Health & Safety Code §
6.53.040(B)(4) .........................................................8
Alameda County, Cal. Health & Safety Code §
6.53.050 .................................................................16
v
TABLE OF AUTHORITIES
Page(s)
Alameda County, Cal. Health & Safety Code §
6.53.050(B) ..............................................................8
Alameda County, Cal. Health & Safety Code §
6.53.050(B)(4) .........................................................8
Alameda County, Cal. Health & Safety Code §
6.53.070(B) ..............................................................7
Alameda County, Cal. Health & Safety Code §
6.53.070(C) ..............................................................7
Alameda County, Cal. Health & Safety Code §
6.53.080(A) ..............................................................8
Cal. Health & Safety Code § 25214.8.10 ...................19
Cal. Health & Safety Code § 25982...........................21
Cal. Pub. Res. Code § 42451 ......................................19
Cal. Pub. Res. Code § 48700 ......................................19
Cal. Pub. Res. Code § 42970 ......................................19
OTHER AUTHORITIES
Alston & Bird LLP, Ninth Circuit Upholds
Alameda County’s Drug Take-Back
Ordinance, Oct. 6, 2014 ........................................17
Beveridge & Diamond, Ninth Circuit Upholds
Alameda Safe Drug Disposal Ordinance,
Triggering Implementation of King County
Secure Medicine Return Rule, Oct. 3, 2014 .........18
vi
TABLE OF AUTHORITIES
Page(s)
California Legislative Information, SB-727
Medical Waste: Pharmaceutical Product
Stewardship Program ..........................................18
Donald H. Regan, Siamese Essays: (I) CTS
Corp. v. Dynamics Corp. of America and
Dormant Commerce Clause Doctrine; (II)
Extraterritorial State Legislation, 85 Mich.
L. Rev. 1865 (1987) .........................................13, 14
Ed Silverman, Wall Street Journal Pharmalot
Blog, Oct. 1, 2014 ..................................................17
James Madison, Preface to Debates in the
Convention of 1787, in 3 Records of the
Federal Convention of 1787, 547 (Max
Farrand ed., 1911) ................................................14
Noah Sachs, Planning the Funeral at the Birth:
Extended Producer Responsibility in the
European Union and the United States, 30
Harv. Envtl. L.R. 51 (2006) ............................19, 20
Prod. Stewardship Inst., Map of State and
Local EPR Laws ...................................................19
The Federalist No. 11 (Alexander Hamilton)
(Hallowell ed., 1826) .............................................14
The Federalist No. 42 (James Madison) (Jacob
E. Cooke ed., 1961) .................................................5
1
INTEREST OF AMICUS CURIAE1
The Chamber of Commerce of the United States
(“Amicus” or the “Chamber”) submits this brief as
amicus curiae in support of the petition for certiorari
of the Pharmaceutical Research and Manufacturers
of America, the Generic Pharmaceutical Association,
and the Biotechnology Industry Organization. The
Chamber is the world’s largest business federation,
directly representing 300,000 members and indirectly
representing the interests of more than three million
companies and professional organizations of every
size, in every industry sector, and from every region
of the country. The Chamber represents its members’
interests before Congress, the executive branch, and
the courts.
The Chamber’s members transact business in
interstate commerce every day. For this reason, they
have an acute interest in the proper application of
constitutional principles that promote the flow of
commerce across state lines and prevent local
governments from hindering interstate commerce or
imposing coercive conditions on out-of-state parties.
The Chamber’s members also have a strong interest
in preventing the proliferation of inconsistent
1
No counsel for any party authored this brief in whole or in
part, and no person other than Amicus, its members, or its
counsel made any monetary contribution intended to fund the
preparation or submission of this brief. Counsel for all parties
received notice of Amicus’s intention to file this brief at least 10
days prior to the due date, and Petitioners consented to the
filing of this brief. Respondents did not so consent, and Amicus
accordingly has submitted a Motion for Leave to File.
2
regulations across states and municipalities, in light
of the significant expense and practical difficulty that
patchwork regulations visit upon interstate
companies.
For these reasons, the Chamber
regularly files amicus briefs in important cases, like
this one, involving potential impediments to the free
flow of interstate commerce.
SUMMARY OF ARGUMENT
The Chamber respectfully urges this Court to
review the Ninth Circuit’s decision below, which
endorses municipal laws that further wholly local
interests by imposing regulations on commercial
actors and transactions up the distribution chain.
Alameda County’s Safe Drug Disposal Ordinance (the
“Ordinance” or the “Alameda Ordinance”) reaches
across county, state, and even international borders
to conscript pharmaceutical companies into funding
and overseeing a classic local government service:
refuse disposal.
Under the Ordinance, a
pharmaceutical company must establish a “takeback” program for disposing of unused drugs if any of
their products are purchased by end-users within the
County after flowing through a nationwide
distribution network. Alameda County freely admits
that all of the products made by the manufacturers
represented by Petitioners are sold into the County
by outside distributors. The County also admits that,
with very few exceptions, all of the represented
manufacturers are themselves located outside the
County. The County insists, however, that it has the
authority to reach all the way up national and
international commercial chains to impose local
3
disposal
conditions
manufacturers.
upon
those
outside
The regulatory power that Alameda County
claims over interstate commerce is striking. The
Ordinance on its face reaches drug manufacturers
whose sole connection to Alameda County is that
their products are sold in local outlets—almost
always by another commercial actor. It provides that
if a “Covered Drug” is “sold or distributed” within
county lines, the original manufacturer of the product
ultimately sold in-county is subject to affirmative
regulatory obligations.
Those obligations apply
irrespective of who sold the product or the
remoteness of the manufacturer along the chain of
distribution. Thus a manufacturer located on the
East Coast, or even abroad, that sells its products to
a nationwide distribution company is, by the sole fact
of that out-of-county sale, subject to regulation by a
distant municipal sovereign.
The manufacturer
incurs the same Alameda County disposal duty if a
mail or internet pharmacy fills a single prescription
for a county resident.
This regulatory burden is substantial. Under the
Ordinance, regulated manufacturers—nearly all of
whom have no local operations—must enter Alameda
County in order to design, seek approval for, operate,
fund, and report on a “Product Stewardship Program”
for the disposal of unused prescription drugs.
Manufacturers also must advertise the program to
Alameda County residents, implement an outreach
campaign, and continuously seek re-approval for the
program from county officials at least every three
years. Compliance with the Ordinance will cost
4
manufacturers hundreds of thousands of dollars
annually. Pet. App. 14a.
By imposing affirmative obligations on out-ofcounty manufacturers for their out-of-county activity,
the County violates the dormant Commerce Clause
and threatens core federalism principles. This Court
has long held that, under the dormant Commerce
Clause, state and local governments have “no power
to project [their] legislation” into other jurisdictions,
Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 521, 522
(1935), and that they are thus prohibited from
regulating “‘commerce that takes place wholly outside
[their] borders, whether or not the commerce has
effects within the State.’” Healy v. Beer Inst., 491
U.S. 324, 336 (1989) (quoting Edgar v. MITE Corp.,
457 U.S. 624, 642-43 (1982) (plurality opinion)). Yet
the Ninth Circuit upheld the Ordinance without
applying, or offering any reasoned analysis of, this
extraterritoriality bar. In a single sentence, the
Court dismissed Healy on the basis of Pharmaceutical
Research and Manufacturers of America v. Walsh,
538 U.S. 644, 669 (2003). Pet. App. 11a n.2. But
Walsh had no occasion to address whether a local
government could impose regulations—backed by
substantial noncompliance penalties—on out-of-state
entities that are connected to the municipality only
by an interstate commercial chain where another
commercial actor is the final link. Rather, Walsh
held only that a state law that altered an existing
subsidy program “to achieve additional cost savings
on Medicaid purchases” did not constitute
extraterritorial regulation of out-of-state drug
manufacturers. Walsh, 538 U.S. at 649.
5
This Court should grant certiorari to clarify the
continuing force of the longstanding principle that
municipalities may not impose regulations on
activities occurring outside their borders.
By
allowing municipalities to regulate out-of-state
companies whenever those companies “choose[] to
engage the state or county through interstate
commerce” (Pet. App. 12a (emphasis added)), the
Opinion below departs from this Court’s precedents
and destabilizes federalism’s balance of national and
state power in favor of parochial interests. Because
the market for pharmaceuticals is national in scope, a
manufacturer has little “choice” but to avail itself of
the distribution network that makes its drugs
available to local pharmacies and consumers. The
extraterritoriality
prohibition
supports
and
safeguards such channels of interstate commerce,
protecting its participants from overlapping and
inconsistent regulation. It also reinforces local
government accountability by aligning the regulated
population with the voting population.
These
concerns go to the heart of constitutional federalism:
The Framers sought to eliminate the “serious
interruptions of the public tranquillity” that could
flow from local efforts to burden the free flow of trade
among the states. The Federalist No. 42, at 283
(James Madison) (Jacob E. Cooke ed., 1961).
The Opinion below also carries serious
consequences for drug makers and other national
manufacturers. If allowed to stand, the decision
below would force drug manufacturers to establish
local waste disposal operations in Alameda County.
Any manufacturer seeking to avoid this duty would
be forced to take steps to ensure that its products do
6
not cross County lines.
Worse still, other
jurisdictions have already begun to promulgate
similar drug take-back laws and may extend the
Ninth Circuit’s reasoning to other products in other
industries. The result may be a new network of local
laws ensnaring distant manufacturers in a web of
locality-specific obligations.
Although this Court properly reserves its
resources for cases of exceptional importance, the
Chamber submits that this is such a case, and that
the time for this Court to resolve the issue is now.
Further percolation of this issue will only worsen the
jurisdiction-by-jurisdiction inconsistencies that the
dormant Commerce Clause was meant to prevent.
The petition for certiorari should be granted.
ARGUMENT
I.
BY UPHOLDING A LOCAL LAW THAT
OPERATES ACROSS STATE LINES, THE
OPINION BELOW CONTRAVENES THIS
COURT’S
DORMANT
COMMERCE
CLAUSE PRECEDENTS, FLOUTS CORE
FEDERALISM
PRINCIPLES,
AND
DISRUPTS INTERSTATE COMMERCE
a.
The Ordinance Imposes Conditions on
Out-of-County
Commercial
Transactions for Purely Local Ends
The Alameda Ordinance places regulatory
requirements and conditions on commercial actors
based on out-of-state transactions as though they
were wholly local activities. Under the Ordinance, an
7
out-of-state drug manufacturer whose products pass
through the national chain of commerce and find
their way to Alameda County is conscripted into
designing and managing an Alameda-specific
program to retrieve pharmaceutical waste that may
or may not include waste from the manufacturer’s
own products. By reaching far up the national
distribution chain and hailing interstate drug
manufacturers
into
Alameda
County,
the
Ordinance—in the parlance of the Dormant
Commerce Clause—regulates “extraterritorially.”
The Ordinance’s parochial objectives, and national
scope, are evident from its face. It compels any
“Producer” whose “Covered Drug” is sold or
distributed in Alameda County to operate and fund a
“Product
Stewardship
Program”
(“Program”).
Alameda County, Cal., Health & Safety Code
§ 6.53.040(A). By definition, each Program must
“collect, transport, and dispose of” Alameda County’s
unused prescription drugs.
Id. § 6.53.030(15).
Regulated Producers also must offer “educational and
other outreach materials,” id. § 6.53.070(B), that
“publicize the location and operation of collection
locations in Alameda County,” id. § 6.53.070(C),
among other things.
The
Ordinance
sweeps
out-of-state
pharmaceutical manufacturers within its reach. Any
“owner or licensee of a trademark or brand” under
which a Covered Drug is ultimately “sold or
distributed in Alameda County” is subject to
affirmative refuse collection duties as a “Producer”
under the Ordinance. Id. § 6.53.030(14)(ii). For this
reason, under the Ordinance, an out-of-county or
8
international drug manufacturer that sells its
product to a national distributor located outside the
County will be regulated if any fraction of the
manufacturer’s product is ultimately sold in Alameda
County.
If, for example, a Massachusetts drug
manufacturer sells its product to a Tennessee
distributor with a national distribution base, that
out-of-county transaction, without more, compels the
Massachusetts manufacturer to operate a drug takeback program in a far-away county in California.
Because drug distribution—at least until now—has
moved freely across state and municipal lines, the
Ordinance would make all drug manufacturers
Alameda County refuse collectors.
The burdens created by the Ordinance on
pharmaceutical companies are substantial, and
produce benefits only for Alameda County citizens.
Drug companies must submit a “product stewardship
Plan” (“Plan”) for County approval, id. § 6.53.050(B),
and then resubmit it “at least every three years,” id.
§ 6.53.050(B)(4). Those Producers whose Plans the
County approves must also prepare and submit an
annual written report that exhaustively “describ[es]
the Program’s activities.” Id. § 6.53.080(A). All costs
associated with these Programs must be borne by the
Producers, either individually or collectively through
a jointly-operated Program. Id. § 6.53.040(B). And
on top of their own expenses, Producers must also
pay Alameda County itself for the cost of
implementing and enforcing the Ordinance.
Id.
§ 6.53.040(B)(4).
9
b.
The Ninth Circuit’s Endorsement of
Extraterritorial Municipal Regulation
Contravenes this Court’s Dormant
Commerce Clause Precedents
By reaching outside its territorial boundaries to
impose conditions upon transactions occurring
outside Alameda County, the Ordinance violates the
Commerce Clause. The negative or “dormant” aspect
of the Commerce Clause “limits the power of the
States,” Wyoming v. Oklahoma, 502 U.S. 437, 454
(1992), including by prohibiting them from “directly
control[ling] commerce occurring wholly outside
[their] boundaries,” Healy v. Beer Inst., Inc., 491 U.S.
324, 336 (1989). This extraterritoriality doctrine has
been a core constitutional principle since the 19th
century, see Bonaparte v. Tax Court, 104 U.S. 592,
594 (1881), and was first linked to the Commerce
Clause in Baldwin, 294 U.S. 511. In Baldwin, this
Court invalidated a New York statute setting
minimum prices for milk purchases. New York
purported to regulate not only milk purchased within
the state, but also milk purchased in Vermont for
resale in New York. Baldwin, 294 U.S. at 522. But
New York, the Court held, had “no power to project
its legislation into Vermont by regulating the price to
be paid in that state for milk acquired there.” Id. at
521.
The Court has since drawn on this aspect of the
Commerce Clause to invalidate a statute empowering
a state regulator to prevent interstate stock
transactions taking place outside state lines. See
Edgar v. MITE Corp., 457 U.S. 624, 642-43 (1982)
(plurality opinion).
And it has invoked
10
extraterritoriality principles in striking down state
“price-affirmation laws,” which effectively regulated
the liquor price sold in other states by requiring
liquor distributors to post those prices and affirm
they would not sell liquor at a lower price in any
neighboring state. Brown-Forman Distillers Corp. v.
N.Y. State Liquor Auth., 476 U.S. 578, 583 (1986);
Healy v. Beer Inst., 491 U.S. 324, 336-37 (1989).
Taken together, these cases establish that the
“‘Commerce Clause . . . precludes the application of a
state statute to commerce that takes place wholly
outside of the State’s borders, whether or not the
commerce has effects within the State.’” Healy, 491
U.S. at 336 (quoting Edgar, 457 U.S. at 642-43). The
doctrine reflects not only the federal government’s
primary power over interstate commerce, but also the
need for states “to respect the interests of other
States.” BMW of N. Am., Inc. v. Gore, 517 U.S. 559,
571 (1996).
In this case, as in Healy, Edgar, and BrownForman, Alameda County reaches beyond its borders
to place burdens and conditions on transactions
occurring outside the County. With just a few
exceptions, the Plaintiffs’ member companies design
and manufacture pharmaceutical products outside of
Alameda County and distribute their products
through companies that are also located outside
County lines. Pet. 5. Yet, transactions among these
out-of-county manufacturers and out-of-county
distributors subject the manufacturers to the onerous
requirements of the Ordinance.
These burdens
include submitting a stewardship Plan, revising the
Plan regularly according to County specifications,
funding the Plan and Program, and preparing annual
11
reporting. By imposing these requirements, the
County has taken local waste and refuse
responsibilities and shifted that burden to
commercial actors in other states.
The Court’s
precedents squarely foreclose regulations that
operate in such territorial fashion. See Healy, 491
U.S. at 336 (“The critical inquiry is whether the
practical effect of the regulation is to control conduct
beyond the boundaries of the State.”).
The Ninth Circuit all but ignored these principles,
stating in a footnote that “the test articulated in
Healy may not apply to the Ordinance at all.” Pet.
App. 11a n.2. The court rested this determination on
a Ninth Circuit case2 applying Pharmaceutical
Research and Manufacturers of America v. Walsh,
538 U.S. 644, 669 (2003). But Walsh provides no
basis to ignore the extraterritorial obligations
imposed by Alameda County. Walsh did not involve a
statute that directly imposed conditions on out-ofstate commercial activity; the Maine statute at issue
amended the state’s prescription subsidy program,
allowing drug manufacturers to enter into “rebate
agreements” with the state “to achieve additional cost
savings on Medicaid purchases.”
Id. at 649.
Manufacturers were not compelled to enter into the
rebate agreements, although prescriptions for drugs
manufactured by companies without rebate
agreements were subject to a “prior authorization
program” for Medicaid payments. Id. at 654.
2
Association des Éleveurs de Canards et d’Oies du Québec v.
Harris, 729 F.3d 937 (9th Cir. 2013), cert. denied, 135 S. Ct. 398
(2014).
12
The Maine statute challenged in Walsh thus
directed the flow of the state’s existing subsidies for
prescription drug purchases, giving manufacturers a
choice between a reduced subsidy amount (under a
rebate agreement) or state gatekeeping of fullysubsidized purchases (via a prior authorization
program). Id. at 654. The statute did not “control
conduct beyond [state] boundaries.” Healy, 491 U.S.
at 336. A manufacturer making an out-of-state sale
to a national distributor reselling in Maine faced no
penalties for not participating in the state’s rebate
program. And any effect on the manufacturer’s sales
was indirect, flowing from “additional procedural
burdens” that prior authorization places “on
physicians prescribing the manufacturer’s drug and
retail pharmacies dispensing it.” Walsh, 538 U.S. at
656 (internal quotation marks and citation omitted).
Walsh therefore correctly rejected the challenge to
the Maine statute in the absence of any “direct[]
control[] [of] commerce occurring wholly outside”
Maine’s boundaries. Healy, 491 U.S. at 336. The
reasoning of Walsh does not govern here, where the
Alameda
Ordinance
attaches
affirmative
obligations—backed by substantial noncompliance
penalties—to
out-of-county transactions.
A
manufacturer’s out-of-state transaction with a
national distributor reselling in Alameda County
means the manufacturer must comply or pay fines,
subjecting
the
manufacturer
to
affirmative
obligations with a clear extraterritorial reach.
The Ninth Circuit also placed weight on the fact
that
the
Ordinance
regulates
only
those
manufacturers whose products ultimately cross the
13
County line after flowing through interstate
commerce.
Pet. App. 11a.
But this supposed
limitation
does
not
cure
the
Ordinance’s
constitutional defect. The Constitution precludes the
application of a local law to commerce that takes
place wholly outside jurisdictional boundaries
“whether or not the commerce has effects within” the
jurisdiction. Healy, 491 U.S. at 336. In this case, the
in-county transactions that trigger the Ordinance
may be the last link in the interstate distribution
chain, but the Ordinance undisputedly reaches back
up that chain, across county and state lines, to
regulate out-of-county actors for those out-of-county
transactions. The Ninth Circuit ought to have struck
down a local law with this extraterritorial reach
under this Court’s precedents. The petition should be
granted to clarify those precedents’ continuing force.
c.
The Opinion Below
Federalism Principles
Ignores
Core
In upholding the Ordinance, the Ninth Circuit
reached a result that is at odds with federalism
principles repeatedly recognized by this Court. The
bar on extraterritorial state regulation is not only an
aspect of the Commerce Clause, but is also “one of
those foundational principles of our federalism,”
evident “from the structure of the Constitution as a
whole.” Donald H. Regan, Siamese Essays: (I) CTS
Corp. v. Dynamics Corp. of America and Dormant
Commerce Clause Doctrine; (II) Extraterritorial State
Legislation, 85 Mich. L. Rev. 1865, 1885 (1987). For
well over a century, this Court has repeatedly made
clear that “[n]o State can legislate except with
reference to its own jurisdiction.” Gore, 517 U.S. at
14
571 (quoting Bonaparte, 104 U.S. at 594). “[T]he
extraterritoriality principle is our central principle of
state legislative jurisdiction.”
Regan, Siamese
Essays, at 1894. For this reason, state laws “have no
force of themselves beyond the jurisdiction of the
state which enacts them, and can have
extraterritorial effect only by the comity of other
states.” Huntington v. Attrill, 146 U.S. 657, 669
(1892).
The Opinion below nowhere mentions, much less
does it grapple with, the federalism concerns raised
by local laws that operate extraterritorially. These
concerns, however, go to the heart of our
constitutional structure. The extraterritoriality bar
promotes political accountability by aligning the
voting populace with the regulated population. Cf.
Printz v. United States, 521 U.S. 898, 920 (1997)
(“The Constitution [] contemplates that a State’s
government will represent and remain accountable to
its own citizens.”). And it protects those transacting
in the interstate market from the mischief created by
inconsistent regulation. A central purpose driving
the formation of the Union was to create a separate
government with the singular authority to regulate
on a national scale. See Gibbons v. Ogden, 22 U.S. 1,
100 (1824). As Alexander Hamilton warned during
the 1787 ratification debates, commercial relations
between the states would continue to be “fettered,
interrupted, and narrowed by a multiplicity of
causes” if local laws were allowed to interfere with
commerce among the states. The Federalist No. 11,
at 63 (Alexander Hamilton) (Hallowell ed., 1826); see
also James Madison, Preface to Debates in the
Convention of 1787, in 3 Records of the Federal
15
Convention of 1787, 547 (Max Farrand ed., 1911)
(“The . . . want of a general power over Commerce led
to an exercise of this power separately, by the States,
which not only proved abortive, but engendered rival,
conflicting and angry regulations.”). The Framers
thus shared “the conviction that in order to succeed,
the new Union would have to avoid the tendencies
toward economic Balkanization that had plagued
relations among the Colonies and later among the
States under the Articles of Confederation.’” Okla.
Tax Comm’n v. Jefferson Lines, 514 U.S. 175, 180
(1995) (quoting Wardair Canada, Inc. v. Fla. Dep’t of
Rev., 477 U.S. 1, 7 (1986)).
By ignoring the Ordinance’s extraterritorial reach,
the Court elevated form over substance and paved
the way for more cross-state regulatory incursions.
Healy and its progeny make clear that a state’s
regulation of commercial activities in another state
raises deep federalism, and thus constitutional,
problems. Regardless of whether a state intended to
target out-of-state commercial activity or effectively
shifted regulatory burdens across state lines,
federalism principles bar one state from interfering
with commerce beyond its borders. Because the
Opinion below places a local law that creates local
duties based upon out-of-state activities as beneath
constitutional concerns, it threatens to inject further
confusion
into
dormant
Commerce
Clause
jurisprudence. This Court should intervene to clarify
the scope of the extraterritoriality doctrine and
confirm its continuing vitality.
16
d.
By Allowing Municipalities to Impose
Regulatory Obligations Outside Their
Borders, the Ninth Circuit’s Ruling
Threatens Significant Disruption to
Interstate Commerce
The Ninth Circuit’s decision threatens to impose
serious and immediate burdens on interstate
pharmaceutical companies. These companies will, as
a practical matter, be forced to choose between
expending money and resources establishing a waste
disposal
program
for
Alameda
County
or
implementing measures to ensure none of their
products are sold there. Under cover of the Ninth
Circuit’s decision, other municipalities may adopt
similar drug take-back laws or extend the Ninth
Circuit’s reasoning to other products in other
industries, creating a whole new class of local laws
reaching up interstate commercial chains to impose
locality-specific
obligations
on
far-flung
manufacturers.
Left standing, the Ninth Circuit’s decision would
require every prudent pharmaceutical manufacturer
dealing with national distributors to bear the
substantial costs of establishing the collection and
education operations required for a valid “Product
Stewardship Program.”
Alameda County, Cal.,
Health & Safety Code § 6.53.050. The fact that
manufacturers that “do[] not sell, offer for sale, or
distribute prescription drugs in Alameda County”
may avoid creating such a Program (Pet. App. 11a)
does not ameliorate this burden. Manufacturers
attempting to stop delivery of their products to
Alameda County would face financial and logistical
17
hurdles that may make it more expensive to avoid the
Alameda County market than to comply with the
Ordinance. And even if national manufacturers
succeeded in diverting distributions away from
Alameda County, that result would frustrate the
Framers’ purpose of preventing states “‘from
retreating into economic isolation’” by imposing
onerous regulations on interstate commerce. Fulton
Corp. v. Faulkner, 516 U.S. 325, 330 (1996) (quoting
Okla. Tax Comm’n, 514 U.S. at 180).
Nor are the Opinion’s effects limited to the
Ordinance or the pharmaceutical industry. The
Opinion invites other jurisdictions to adopt local takeback laws across a wide range of product categories.
Under the Ninth Circuit’s decision, a locality may
impose affirmative obligations on out-of-state
manufacturers whose products are sold into national
commerce so long as the manufacturer’s products
ultimately arrive in the regulating jurisdiction at the
end of the commercial chain. Pet. App. 12a. This
flawed analysis may be applied to virtually any takeback scheme for an array of widely available
products.
Indeed, Alameda County has stated
publicly that it hopes its Ordinance “will set a
national precedent as a new policy tool for local
governments,” Ed Silverman, Wall Street Journal
Pharmalot Blog, Oct. 1, 2014,3 and commentators
believe that the County will get its wish. See Alston
& Bird LLP, Ninth Circuit Upholds Alameda
3
Available at http://blogs.wsj.com/pharmalot/2014/10/01/thatflushing-sound-pharma-must-pay-for-a-drug-take-backprogram/.
18
County’s Drug Take-Back Ordinance, Oct. 6, 2014
(“With this Ninth Circuit opinion, the floodgates are
now open for similar pharmaceutical take-back
initiatives in California and across the country, as
well as additional extended producer responsibility
laws for a vast array of consumer products.”).4
The proliferation of far-reaching local take-back
laws has already begun. In 2014, for example, the
California State Assembly considered a bill that
would have created a statewide pharmaceutical takeback program.
See California Legislative
Information, SB-727 Medical Waste: Pharmaceutical
King County,
Product Stewardship Program.5
Washington has also enacted a drug take-back
ordinance similar to Alameda’s, see King Cnty.,
Wash. Secure Medicine Return Rule & Regulation;6
the implementation of the King County ordinance
was suspended pending the Ninth Circuit’s ruling but
is now going forward.7 In addition, the state of
4
Available at http://www.alston.com/advisories/ninth-circuitupholds-alameda/.
5
http://leginfo.legislature.ca.gov/faces/bill
NavClient.xhtml?bill_id=201320140SB727, last visited Jan. 27,
2015.
6
http://www.kingcounty.gov/healthservices/health/
BOH/MedicineTakeback.aspx, last visited Jan. 27, 2015.
7
Beveridge & Diamond, Ninth Circuit Upholds Alameda Safe
Drug Disposal Ordinance, Triggering Implementation of King
County Secure Medicine Return Rule, Oct. 3, 2014 (“The
Alameda decision triggers the implementation timeline for the
Secure Medicine Return Rule & Regulation … in King County,
Washington.”),
http://www.bdlaw.com/news-1649.html,
last
visited Jan. 27, 2015.
19
California has already instituted numerous other
“extended producer responsibility” laws for a wide
array of products, including batteries, paint,
thermostats, and carpets. See Cal. Pub. Res. Code
§§ 42451 et seq. (batteries), 48700 et seq. (paint),
42970 et seq. (carpets); Cal. Health & Safety Code
§ 25214.8.10 et seq. (thermostats).
The Product
Stewardship Institute, which collects information
about such statutes, shows that 34 states have at
least one state or local extended-producer law. See
Prod. Stewardship Inst., Map of State and Local EPR
Laws.8
Even as these extended producer laws stretch the
traditional understanding of a state’s constitutional
authority, their local benefits are far from clear.
Extended producer responsibility schemes have been
criticized on the ground that their transaction costs
may outweigh their environmental benefits. See
Noah Sachs, Planning the Funeral at the Birth:
Extended Producer Responsibility in the European
Union and the United States, 30 Harv. Envtl. L.R. 51,
51 (2006) (“Planning the Funeral”). The use of such
schemes raise special concerns in the context of
unused pharmaceuticals.
When aggregated for
collection, unused drugs present serious risks of theft
and
abuse
that
government
entities,
not
manufacturers, are best positioned to address. In
addition, drug take-back laws are unlikely to spur
manufacturers to reorient production towards
sustainability, given that the volume of unused drugs
8
http://www.productstewardship.us/?State_EPR_Laws_Map,
last visited Jan 27, 2015.
20
is most directly controlled by those who prescribe and
consume them, not by manufacturers. Drug takeback laws are thus particularly ill-suited to fulfilling
the
purported
goal
of
extended
producer
responsibility, which seeks to “provide market
incentives for bringing environmental considerations
into the design process” for consumer products.
Sachs, Planning the Funeral, 30 Harv. Envtl. L.R. 51,
53. In any event, whatever their merits, extended
producer responsibility laws cannot constitutionally
govern commerce taking place outside the jurisdiction
that imposes them. Because the Alameda Ordinance
does just that, this Court should grant certiorari to
avoid the cascade of ill effects that may result from
the Ordinance and its likely progeny.
II.
THE TIME FOR REVIEW IS NOW
Certiorari is warranted to limit the ill effects of
the Ninth Circuit’s decision sanctioning the
imposition of municipal regulatory obligations on outof-county transactions.
As explained, the
consequences of the Ninth Circuit’s ruling are already
growing; withholding review while additional
municipalities adopt, and courts rule on, similar laws
will only worsen the regulatory inconsistencies
visited on interstate companies.
The Chamber
respectfully submits that the time for the Court’s
review of this issue is now.
This case also presents an appropriate vehicle for
the Court to correct the Ninth Circuit’s refusal to
apply its extraterritoriality precedents.
The
Chamber recognizes that this Court last Term denied
certiorari in Association des Éleveurs de Canards et
21
d’Oies du Québec v. Harris, 729 F.3d 937 (9th Cir.
2013), cert. denied, 135 S. Ct. 398 (2014), a case
involving the allegedly extraterritorial application of
California’s foie gras ban to out-of-state poultry
farmers. But the California statute challenged in
that case prohibited the sale of a certain sort of
product within the state. See Cal. Health & Safety
Code § 25982 (prohibiting sale of products resulting
from “force feeding a bird”). In this case, by contrast,
the Alameda Ordinance, instead of simply regulating
the sale of certain products within the jurisdiction,
reaches up the national commercial chain to impose
affirmative, county-specific obligations on the out-ofstate manufacturers who create the products.
Because Alameda County’s actions operate more
directly on commercial transactions taking place in
other states, its Ordinance carries far more serious
consequences for interstate companies.
CONCLUSION
For these reasons, the Chamber respectfully urges
this Court to grant the petition for certiorari.
Respectfully submitted,
U.S. CHAMBER LITIGATION
CENTER, INC.
KATE COMERFORD TODD
TYLER R. GREEN
1615 H Street, N.W.
Washington, DC 20062
(202) 463-5337
22
FRED A. ROWLEY, JR.
Counsel of Record
ELLEN MEDLIN RICHMOND
MUNGER, TOLLES & OLSON LLP
355 South Grand Avenue
Thirty-Fifth Floor
Los Angeles, CA 90071-1560
(213) 683-9100
[email protected]
Counsel for Chamber of
Commerce of the United States
of America
WORD COUNT CERTIFICATION
Pursuant to Supreme Court Rule 33.1(h), I certify
that the foregoing proposed Brief of the Chamber of
Commerce of the United States of America as Amicus
Curiae in Support of Petitioners contains 4,713
words, including footnotes but excluding the caption,
table of contents, table of cited authorities, and
counsel listing. This word count was prepared using
the word count feature of Microsoft Word, the wordprocessing system used to prepare the document.
Respectfully submitted,
[s]Fred A. Rowley, Jr.
FRED A. ROWLEY, JR.
Counsel of Record
MUNGER, TOLLES & OLSON LLP
355 South Grand Avenue
Thirty-Fifth Floor
Los Angeles, CA 90071-1560
(213) 683-9100
[email protected]
Counsel for Chamber of
Commerce of the United States
of America